In its post-FSI submission to Treasury, ClearView said it has cautioned that recommendations made by FSI chairman David Murray and LIAWG independent chair John Trowbridge will “threaten the sustainability” of advisers.

“ClearView [has] warned that recommendations made by the FSI and the recent Trowbridge Report, which proposed mandating level commission payments and/or heavily capping initial advice payments and commissions, were excessive and would lead to undesirable outcomes,” a statement from ClearView said.

“Changes to adviser income structures must be carefully assessed in terms of their likely impact on incomes and how advisers can or will likely respond,” it said.

Commenting on the submission, ClearView managing director Simon Swanson said he has urged the government and regulators to end their “misdirected and narrow fixation” on fixing the problem of churning and instead to focus on turning advice into a profession.

“Level commissions are not the answer. Nor is a restrictive and inadequate initial advice payment allowance and ongoing commission. In fact, they are both well wide of the mark,” Mr Swanson said.

“Any remuneration design should support quality advice. While it should discourage over-selling and churning, it must foster competition and take into account the real and tangible upfront costs associated with delivering life insurance advice.”

In ClearView’s submission, the life insurer pointed out it has recommended that a remuneration policy needed to continue to allow for some upfront payment at the point of client acquisition and product replacement.

“A level only payment structure which excessively defers adviser payments, if otherwise adequate, would only increase the cost of providing advice and cover, making it more expensive to consumers,” the statement said.